RIAA: LimeWire CEO hid money

The Recording Industry Association of America (RIAA) is one step closer to shutting LimeWire down for good, and now the trade group is accusing LimeWire’s founder of hiding money.

LimeWire founder Mark Gorton allegedly hid money so he wouldn’t have to pay any penalties associated with copyright infringement.  Gorton is accused of transferring almost 90 percent of LimeWire’s ownership to a family account after the MGM v. Grokster ruling was handed down in 2005.

RIAA: LimeWire CEO hid money

Specifically, the family trust is controlled by Gorton, his wife and two children, but it’s unknown how much money was transferred to the family account.

The legal drama for LimeWire first began in 2006, when copyright holders said as much as 93 percent of content traded through the peer to peer network was pirated.  Since then, LimeWire has operated in legal limbo with the company facing increased pressure from the RIAA and other copyright groups.

The RIAA won a summary judgment and then requested a permanent restraining order so LimeWire would have to temporarily shut down.  Judge Wood is expected to close LimeWire in a matter of days, though the company is expected to re-launch as a legal service before the end of the year.

Once LimeWire is closed down, the RIAA and LimeWire will fight over a number that Gorton will owe in monetary damages.  An attorney previously said LimeWire technically owes $1.5 trillion for 200,000,000 alleged copyrighted music downloads — and the RIAA will try to gain as much as it can from Gorton.

Music producers have also taken aim at LimeWire, with the legal issues mounting for the company.

LimeWire has collected more than $20 million in ad revenue related to its P2P program.  Due to the money generated and the large number of users, this could be a significant boost of morale for the RIAA, even though it may not have a lasting real-world impact on piracy.  LimeWire clones will continue to circulate — and P2P users will just flock to another service flying under the RIAA’s radar.